1 / 81

Federal Contract Compliance – Commercial Items February 10, 2011 Midwest SBLO Meeting

Federal Contract Compliance – Commercial Items February 10, 2011 Midwest SBLO Meeting. Introduction. Presented by Ray Suennen Governmental Contracts Compliance Coordinator Integrys Energy Services, Inc RFSuennen@integrysenergy.com. Federal Regulations.

corine
Download Presentation

Federal Contract Compliance – Commercial Items February 10, 2011 Midwest SBLO Meeting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Federal Contract Compliance – Commercial ItemsFebruary 10, 2011Midwest SBLO Meeting

  2. Introduction Presented by Ray Suennen Governmental Contracts Compliance Coordinator Integrys Energy Services, Inc RFSuennen@integrysenergy.com

  3. Federal Regulations This presentation is focused on compliance with Federal contract requirements for commercial items and subcontracting plan technical issues FAR parts #s and clauses #s are identified for reference purposes

  4. Definitions Commercial Item FAR 2.101 1) Any item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and has been sold, leased, or licensed to the general public; or has been offered for sale, lease, or license to the general public

  5. Definitions Commercial Item • Any item that has evolved from an item in # 1 through advances in technology or performance …… • Any item in # 1 & 2 with commercially available modifications or minor modifications ...... 4) Any combinations of #s 1. 2 & 3 that are available to the general public ……

  6. Definitions Commercial Item • Services such as installation, maintenance, repair, training & others for support of an item in #s 1-4 that the general public is provided… • Services competitively offered commercially based on catalog or market prices ….. Examples include electricity, a welder, an automobile,, drywall, a toothbrush, cabinets, cabinet installation …….

  7. Federal Regulations Commercial Plan A commercial plan is the preferred type of subcontracting plan for contractors furnishing commercial items. FAR 52.219-9 (g)

  8. Federal Regulations Commercial Plan • Covers the offeror’s fiscal year • Applies to the entire production of commercial items sold • Includes the entire company or a portion thereof (division, plant or product line) 19.701

  9. Federal Regulations Commercial Plan & Indirect Costs • May include a proportionate share of indirect costs 52.219-9(d)(1) • Total value of projected subcontracts to support the sales 52.219-9(d)(2) Company wide plans include all indirect costs

  10. Federal Regulations Commercial Plan - Includes offeror’s planned subcontracting for both commercial and Governmental business - One plan in effect at a time • One Contracting Officer approves 52.219-9 (g)

  11. Federal Regulations Subcontracting Plan Requirements Negotiated Acquisition 15.000 1) Is amount is expected to exceed $ 650,000 for non-construction, or $1.5 million for construction; and 2) Do subcontracting possibilities exist The selected offeror must negotiate an acceptable subcontracting plan with Contracting Officer 19.702

  12. Federal Regulations Subcontracting Plan Requirements Sealed Bid Acquisition 6.401 & 14.101 1) Is amount is expected to exceed $ 650,000 for non-construction, or $1.5 million for construction; and 2) Do subcontracting possibilities exist The selected offeror must submit a subcontracting plan to the Contracting Officer 19.702

  13. Federal Regulations Subcontracting Plan Exceptions Not Required 1) From small business concerns 2) For personal service contracts 3) When performance entirely outside of the US and its outlying areas 19.702

  14. Federal Regulations Commercial Plan Reports • Subcontracting Plans are due 30 working days before the end of fiscal year 19.704(d) Once approved, submit to the non-primary Contracting Officers 19.704(d) • Summary Subcontracting Reports (SSR), due 30 days after the close of the reporting period 19.704(a)(10) • Yr-End Supplementary Rprt - SDB due 90 days after submitting Y/E SSR 52.219-9(L)(2)(iii)

  15. Federal Regulations Commercial Items Certain laws are not applicable to or are modified for subcontracts at any tier for the acquisition of commercial items or components FAR 12.504 This is a significant factor in determining the applicable regulations and reporting requirements

  16. Federal Regulations Commercial Items Two very important clauses 52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders-Commercial Items Is required in contracts when the Government purchases a commercial item from a Prime Contractor FAR 12.301(b)(4)

  17. Federal Regulations Commercial Items Two very important clauses 52.244-6 Subcontracts for Commercial Items Is required to be included in Federal contracts with the Prime Contractor for non-commercial items and applies to subcontracts at all tiers (flow down clause) FAR 44.403(a)

  18. Federal Regulations Commercial Items “To the maximum extent practicable, the Contractor shall incorporate, and require its subcontractors at all tiers to incorporate commercial items or nondevelopmental items as components of items to be supplied under this contract.” FAR 52.244-6

  19. Federal Regulations Commercial Items Why does the Government want to use commercial items? - should be less expensive (avoid developmental costs) - shorter time frame to obtain (avoid the development time period) - supply of product exists (manufacturing facilities exist) - market prices already exist (competitive)

  20. Federal Regulations Federal Compliance Requirements There are two independent sources that require compliance with the Federal Government’s Contract Terms and Conditions • Selling directly to the Federal Government • Selling to Federal Government Contractors or Subcontractors

  21. Federal Regulations Federal Compliance Requirements 1) The Federal Government includes the Federal Acquisition Regulations (FAR) clauses in their contracts with the Prime contractor 2) Your suppliers, who are Prime Contractors (or subcontractors of Primes) include the Federal Contract Requirements in their Terms and Conditions in their subcontracts with your company

  22. Federal Regulations Federal contracting involves - Compliance with the FAR Terms & Conditions FAR Clauses Additional business requirements for SocioeconomicCommitment - Small Business Subcontracting Program Supplier Diversity Program

  23. Federal Regulations Federal contracting requires - Adhering to specific requirements focused on purchasing (Socioeconomic) • Collecting additional data (certify size & type) - Additional record keeping (status,dates,NAICS) • Maintenance of records (current/accurate) • Specific reporting (small bus & diverse supplier) - Compliance reviews/audits (Subcontracting Program)

  24. Small Business Administration Socioeconomic Program The need to provide opportunitiesto - Diverse Suppliers (Preferential Suppliers) Disadvantaged Women Veterans & Service-Disabled Veterans (those who have served and sacrificed for our country) Economically Deprived Areas - All Small Businesses (“SB”)

  25. Definition - Small Business A Small Businesses (SB) 1) Is organized for a profit Excludes Non-profit organizations Governmental agencies 2) Must have a place of business in the US (an office or plant)

  26. Definition - Small Business A Small Business 3) Operates primarily within the US or makes a significant contribution to the US economy (pays US income taxes / uses American products/labor) FAR 19.001 “Concern” Note - some foreign companies located in the U.S. are a “Large Business” due to the overall size of their parent company and subs

  27. Definition - Small Business A Small Business FAR 19.102(b)(1) • Does not exceed the size standard for its industry. Size standards are determined by NAICS code by each product or service NAICS – North American Industry Classification System code It is possible to be a Small Business for one NAICS code and a Large Business for another NAICS code

  28. Size Standards – NAICS Codes Methods used to Determine Size of Business 1) Employees Average number over last 12 months 2) Revenues Average for last three years 3) Specific industries (many listed) Electricity – 4 M mega watt hours sold in prior year 19.102

  29. Size Standards – NAICS Codes To Determine the Size of a Business Include employees/revenues/MWhs from - All companies of common ownership - Foreign affiliates - Not-for-profit affiliates - All companies of common interest Joint ventures – 2 methods Spouses business - FAR 19-101(2)

  30. Size Standards – NAICS Codes To Determine the Size of a Business Common Ownership includes all affiliates - Business in question - All subsidiaries - Parent company - All sister companies (must consider control – 19.101)

  31. Size Standards – NAICS Codes What is a Large Business? Simply - everything that does not qualify as a small business - Government agencies - Non-profit organizations - Foreign companies (non-taxpayers) - Businesses that exceed the Small Business Size Standards

  32. Definition - Small Business Small Business Certifications Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as SB, SDB, WOSB, VOSB, SDVOSB or HUBZone Business concern 52.219-8(d) The Year-End Supplemental Report for Small Disadvantaged Business spend on eSRS requires NAICS codes

  33. Size Standards - NAICS Codes To cross reference SIC to NAICS codes, and to lookup NAICS codes use website - http://www.naics.com/search.htm A complete NAICS code listing is at – http://www.sba.gov/contractingopportunities /officials/size/table/index.html Then select PDF format

  34. Definitions FAR Clauses - The Terms and Conditions of the Federal Government as written in the Federal Acquisition Regulations (FAR) which implement the purchasing laws and executive orders of the U.S. Government (Code of Federal Regulations “CFR”) • FAR Clauses all start with “52.2” - Includes both Flow Down Clauses and clauses that do not flow down

  35. Definitions FAR Flow Down Clauses Terms and Conditions that originate when a business has a contract with the Federal Government (called a Prime Contractor) The Flow Down T&C are to be included in the Prime Contractor’s subcontracts to its suppliers (called First-Tier subcontractors) Most Flow Down T&C are to be included in First-Tier subcontracts to their suppliers (Lower Tier subcontractors)

  36. Definitions Incorporate by Reference 52.103 When a FAR Clause is included in the Terms and Conditions only by identifying its FAR number, title and date, it has the same meaning and effect as if it was listed in full text within the document e.g. 52.222-26 Equal Opportunity (Mar 2007) Used in Federal contracts and may be used with Flow Down Clauses in subcontracts

  37. Definitions Contract 2.101 A mutually binding legal relationship obligating a seller to furnish the supplies or services … and the buyer to pay for them Includes, but is not limited to, bilateral instruments and purchase orders which become effective by written acceptance or performance

  38. Definitions Contracting 2.101 “Purchasing, renting, leasing, or otherwise obtaining supplies and services from non-federal sources” Relate these definitions to taxes

  39. Definitions Subcontract “Any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract” 52.203-13(a) Any agreement … entered into … for supplies or services required for the performance of the contract or subcontract 52.219-9(b)

  40. Definitions Subcontract (Direct Costs) “Also includes a transfer of commercial items between divisions, subsidiaries, or affiliates of a contractor or a subcontractor” 15.401 “Includes a transfer of commercial items between divisions, subsidiaries, or affiliates of the contractor or subcontractor at any tier” 52.244-6

  41. Definitions Subcontracting or Spend All purchases/acquisitions/expenditures/ commitments for operations & capital Acquisitions from all sources, unless specifically excluded Report Spend (not revenues or net income) to the Agency that you sold to (not IRS)

  42. Definitions Subcontracting/Spend – excluded items - Payroll - includes deferred comp-401K employee/employer relationship 52.219-9(a) - Taxes - all types – government collects, do not enter into a subcontract to pay taxes and is not for supplies or services 52.219-9(a) - Inter-company charges, shared services and allocations from affiliated companies (indirect costs) 52.219-9(L)

  43. Definitions Spend/Subcontracting – excluded items - Depreciations/amortization – not current period subcontracts - prior expenditures, not “entered into in period” 52.219-9(a) - Offsets to revenues - rebates, refunds, uncollectable accounts/bad debts does not involve the purchasing of supplies or services for the performance of the subcontract 52.219-9(a) - Non-U.S. operations

  44. Federal Regulations Commercial Items – Flow Down Clauses FAR 52.212-5 (e)(1) and 52.244-6 (c)(1) specifically identify the only FAR Clauses that are required to be flowed down to subcontractors Even some of the identified flow down clauses are exempted based upon other FAR Clauses

  45. Terms & Conditions – FAR Flow Down Clauses FAR FLOW DOWN CLAUSES To comply with the terms and conditions of the Federal requirements, a firm can posted the applicable FAR Flow Down Clauses on their website. The link must contains the FAR Clause #, the FAR Clause Title, and the effective date. The address of the Federal Government’s website should also posted, which is where the FAR Clauses in full text are located

  46. Terms & Conditions – FAR Flow Down Clauses FAR Flow Down Clauses Verbiage All subcontracts and solicitations for goods and services for the Contractor (or subcontractor) and all of its subsidiaries must contain reference verbiage to the FAR Flow Down Clauses Federal Acquisition Regulations (“FAR”); The FAR Clauses listed at http://www.companyname.com/supplier.aspx are incorporated by reference, as applicable.

  47. Terms & Conditions – FAR Flow Down Clauses FAR Clauses in Full Text The FAR Clauses in full text are located on the Federal Government’s website at https://www.acquisition.gov/Far/loadmainre.html The FAR Flow Down Clauses per our commercial contracts are as follows:

  48. Terms & Conditions – FAR Flow Down Clauses FAR Flow Down Clause Numbers & Titles 52.222-21 Prohibition of Segregation of Facilities (Feb 1999) 52.222-26 Equal Employment Opportunity (May 2007) 52.222-35 Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sep 2006) 52.222-36 Affirmative Action for Workers with Disabilities 52.222-50 Combating Trafficking in Persons (Feb 2009) 52.203-13 Code of Business Ethics and Conduct (Apr 2010) 52.219-8 Utilization of Small Business Concerns (May 2004) 52.204-10 Reporting Executive Compensation and First-Tier Subcontract Awards (Jul 2010)

  49. Terms & Conditions – FAR Flow Down Clauses FAR Clause Responsibilities 52.222-21 (A) Employment law, applies if have 15 or more employees, applies to all subcontracts 52.222-26 (A) 52.222-35 Applies when subcontract is $100,000 or more, promotes fair and equal treatment of veterans for employment opportunities 52.222-36 (A) (Jun 1998) 52.222-50 Ethical law relating to buying and selling of people, commercial sex acts and using forced labor, only violations reported

  50. Terms & Conditions – FAR Flow Down Clauses FAR Clause Responsibilities 52.203-13 Applies to subcontracts over $5 million, promotes ethical conduct within business, a written ethical policy, distribute the policy, and ethical training, only violations reported 52.219-8 Applies to subcontracts over $150,000, promotes practices for purchasing from small businesses, and small diverse businesses, no reporting

More Related